CFO On Both Sides in Scrushy Trial
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A 4th HealthSouth CFO has testified in the trial of CEO Richard Scrushy. Tadd McVay has already been convicted for his part in the massive fraud involving a overstatement of earnings. Unlike Scott Sullivan in the WorldCom trial, McVay is one of 15 executives testifying that Scrushy was involved. The motive according to prosecutors was tens of millions of dollars in bonuses awarded to everyone. Scrushy's denies all the charges against him. He is employing the same defence as Ebbers, I.e. "I did not know what was going on in my company". The main tactic has been to discredit the prosecution's witnesses. The same was true for McVay. Defence lawyer Jim Parkman aggressively questioned McVay about his own conviction. Parkman drew attention to the 15 years he faced and compared it to the 6 months house arrest he ended up with. In particular the request for 5 years by prosecutor Richard Wiedis, who made McVay to be the "scum of the earth". McVay was said to be currying favour with prosecutors. (Wiedis is also one of the prosecutors in the Scrushy trial.) In response to Parkman's question "you would do anything to avoid prison"? McVay answered "I told the truth period." House arrest was painted as a stay in "a very nice home". The response was "the house was paid for before I ever went to work at HealthSouth". McVay however did support the defence in one area. Namely that Bill Owens, a former CFO, supplied the numbers quoted by Scrushy in investor calls. The defence is trying to pin the blame on Owens for masterminding the fraud. Scrushy is charged with false corporate reporting in the first test of the 2002 Sarbanes-Oxley Act against a chief executive. He also is charged with conspiracy, fraud, money laundering, obstruction of justice and perjury.
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